Tuesday, March 11, 2014
Selling Pressure and Shift to Safety.
We are possibly witnessing some selling pressure beginning to manifest in the markets. Today all indices lost ground. Small caps lead the way with over 1% decline on above average volume. Could this be the beginning of a bearish period?
Our Market Breadth Index ($VMBI) is showing definite signs of increased selling, albeit still not enough to issue a bear alert, much less a confirmation of a shift in market direction. We could still see a turnaround and more new highs.
Telling was the behavior of treasuries and gold today - both gained. This indicates an increase of fear in the markets.
TLT is attempting to close the gap formed by last Friday’s drop. It still has some work cut-out for it.
Gold, it seems, is getting ready to take out resistance by closing above $1355. Should gold do so, GDX will follow suit and take out overhead resistance at $26.95. We would add to our open position in GDX upon close above $26.95, since we would not be surprised to see another 20+ percent up move in GDX.
IYR may have stopped falling. A close above $69.33 would extend this rally and a push to $74 may be in the cards.
Oil fell to below $100 on above average volume. We are bearish oil now. A re-test of January low at $91.24 is likely.
Emerging markets may have indeed rolled over to the downside again. We will wait until Friday close to make a decision of continuing to hold or paring our holdings in EEM.
We are long: GDX, IYR, TLT, EEM, DVY, ETV
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